Single Mothers: Why Their Financial Outlook Has Stagnated for Four Decades
These issues date back to the mid-1980s at the latest, and the passage of the welfare reform bill in 1996 that “ended welfare as we knew it.” The Family and Medical Leave Act of 1993, the Single Parent Protection Act, the Family Support Act of 1988, the establishment of Temporary Assistance for Needy Families (TANF) in the 1988 Act, and other policy changes intended to stabilize single-parent families and support these parents have not kept pace.
This is coupled with numerous tax provisions that apply to families (such as the Child Tax Credit, dependent exemption, and education credits), being structured to benefit the child directly, with few (if any) additional long-term benefits to the parent or custodial household. Stagnant wages, rising costs of childcare and healthcare, and inflexible employer benefits are part of the structural gaps facing single mothers today, who are unable to build wealth for their households.
Here are reasons why single mothers’ finances have not changed in 40 years, as systemic policies and benefits favor dual-income or married households over solo parents.
Marriage tax and financial benefits
Could it be a kind of systemic strategy to make women dependent on a man? The Tax Code of the United States has always been biased in favor of marriage, offering benefits to couples and depriving single parents. According to their filing status, a married couple filing a “joint” return often pays less tax than two single parents filing separately, even with the same total income.
The higher-earning spouse has a lower tax bracket, and a couple who sells a home will receive up to twice the tax break on capital gains. Deductions for charitable contributions and for non-working spouses with IRAs are among the many breaks that benefit two-income or dual-filer households.
There are also so-called “tax shelters” that allow one spouse to offset business losses against the other spouse’s income. Estate and gift taxes are more favorable to married couples, offering an additional way to save on wealth transfers from one generation to the next.
Scant Transfers and Inheritance
For example, a mother and father separate, neither one having accumulated wealth. At the time of the separation, the marital estate is small and the mother cannot pay for childcare—she “homes in” full-time, working only when family members “cover” for her. The father “masters” his occupation, accumulates wealth, buys a home, and invests, much of which will be transferred at death or through gifting into heirs’ accounts, but not hers.
Meanwhile, given that single parents experience fewer intergenerational transfers and smaller transfers on average when they do occur, single mothers are often shut out of important capital injections (gifts, inheritances) that could allow them to buy a home or make investments. According to a ResearchGate study by Salvatore, Brian, Juan, and Philippe, single-parent families across six developed countries hold far less wealth than two-parent families, and in the U.S., the mean wealth is just 17% as much in single-parent families as in two-parent families.
Homeownership is one of the largest disparities: single mothers are much less likely to own the home in which they live, which is a key component of wealth. The upshot is that unpaid caregiving and missed family transfers effectively shut single mothers out of intergenerational gains, such that years of hard work often do not result in long-term financial stability.
The majority of Custodies are Handed to the Mother’s
As the vast majority of Custody rulings favor the mother, they also bear the financial and caretaking burden. According to the Census Bureau, around 80% of custodial parents are moms. Though there are rules and child support laws in place, only 44% of custodial parents are given all they are owed.
Single mothers must make one income cover a house, food, healthcare, and education, and cannot count on the other parent to pitch in. The custody gap increases financial strain and leaves less opportunity for building wealth.
Stubborn Gender and Race Wage Gaps
Nationally, women earn about 82 cents for every dollar that men make. However, Black and Latina mothers earn only 62 cents and 54 cents, respectively, on the dollar. These inequities only widen when a sole income supports an entire household.
Moreover, research demonstrates that the wage gap between men and women single mothers with higher levels of education that single mothers have worked so hard to achieve.
This structural issue has caused single mothers over the course of 40 years to be left behind in the labor market and unable to experience any type of real financial progression.
Financial Illiteracy by Gender
Financial literacy among women is lower than among men in areas such as investing, retirement planning, and other financial products. According to the 2022 TIAA Institute Global Survey, women answered 45% of financial literacy questions correctly, compared to 55% by men.
When it comes to single mothers, this lack of knowledge makes it difficult for women to make informed decisions on credit, loans, or other long-term wealth-building strategies. Single mothers who are unsure about investing often fall into the traps of payday loans or credit cards, digging themselves deeper into debt.
Without financial literacy training or access to a trusted financial advisor, single mothers are stuck in survival mode, spending and unable to build wealth.
Caregiving Work Still Takes the Most Time
Single moms, like many women, tend to do more of the housework (also known as the “second shift”). Activity trackers in research in PMC study titled Gender difference in “second shift” physical activity have found that women who work full-time spend a lot more time on housework and caregiving in the evenings than men (especially in white-collar jobs).
It’s not just the time spent—it’s how the time is spent. Women’s second shift is composed of shorter periods of activity than men’s, making it more stressful and less beneficial to health. Men spend more of their time in prolonged sedentary periods in the evening, while women’s physical activity is chopped up into many more brief spurts.
Single mothers often have no partner to help and frequently face limited access to affordable childcare. The time and energy spent on childcare responsibilities reduce the time and energy available for taking on more work, paid hours, or additional duties in more lucrative jobs.
Slow Growth in Low-Wage Work Pay
Professions they overrepresent often fall into service, retail, or healthcare support work, where there has been significant wage stagnation. The Economic Policy Institute notes that these jobs often experience real wage growth that has remained flat since 1979.
A family with a full-time income in these fields can often live below the poverty threshold. Single mothers in these professions often face structural barriers to higher pay, with low bargaining power and limited union representation. The stagnation means they’re often earning the same amount in real terms as someone 40 years ago.
Lack of Employer Benefits
Parents who work these jobs often do so by necessity because they need the money to help provide for their families and the flexibility to care for their children, yet they often lack many of the benefits and safety nets that could help keep them afloat. For example, as they often do not have paid leave, health insurance, or retirement plans, single mothers working in these jobs shoulder the burden of unexpected expenses and retirement planning.
Data from before and after the expansion of health insurance coverage under the Affordable Care Act finds that part-time workers are significantly less likely than full-time employees to be offered access to employer-sponsored health insurance or retirement plans. These added benefits could also aid in investment in education, skill development, and purchasing a home.
Childcare costs outpace inflation by 220%
Childcare in America has become outrageously expensive, with the U.S. Department of Labor estimating an average annual cost of $11,000 per child. For single mothers on stagnant wages, childcare bills account for 25%-40% of their income.
Only a small proportion of families receive subsidies, and waiting lists are years long. The result is that many single mothers are forced to work part-time or drop out of the workforce, completely jeopardizing their long-term economic security.
Student Debt Crisis
Women owe two-thirds of the country’s $929 billion in student debt. Women’s debt tends to stay with them for much longer than their male counterparts because women are more likely to be unemployed or have a job that does not pay enough.
On average, women take 2 years longer to repay their student loans. This is because women have to face the fact of a lifetime gender wage gap. As a result, women take much longer to become financially independent, invest, and save for retirement. The burden is even worse for single mothers because the job usually does not have access to benefits, and they have additional caretaking obligations.
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